Four Best Practices for HCM in the Cloud

Avoiding tunnel vision in the cloud requires an understanding of HCM business processes and their larger impact on your underlying infrastructure.

by Christopher Sowa, September 2013

Human capital management (HCM) cloud offerings can radically lower costs and increase functionality. Based on Oracle’s customer experiences, as much as 30 to 60 percent of human resources (HR) IT costs can be shed by leveraging cloud solutions. These solutions provide business users with improved user interfaces and provide HCM business functionality 95 percent sooner than previously possible. In addition, delivering HR analytics and HCM process automation to iPads and other mobile devices can start to revolutionize HCM and other core HR processes.

But in addition to these benefits, there are real business dangers as companies move into the cloud. Business users often push into the cloud focused only on their own siloed business need or because they are anxious to cash in on the latest cloud buzz. Creating a hodgepodge of disconnected HCM applications in the cloud and the data center can end up being worse than your current IT environment. And if you are not careful, it can also provide hackers with new doorways into your company’s mission-critical business processes.

Avoiding tunnel vision in the cloud requires an understanding of HCM business processes and their larger impact on your underlying infrastructure. Here are four best practices you can utilize to increase your return on investment and lower your risk:

For global companies, scalability means going beyond hosting capabilities to include factors such as international localizations and service level agreements (SLAs) that provide for availability, redundancy, and performance at all global locations.

Determine which HCM capabilities are required and how they interact to maximize business. For example, if strategic imperatives of the business are to reduce employee attrition and new employee onboarding cycle times, a solution focused mostly on talent management or recruiting will quickly become inadequate. One company I recently worked with was struggling because it had separate cloud recruiting systems for professional employees and for college students, a separate talent management system, and a separate core HCM transaction system. The result was that managers lacked a clear view of their new hire efforts. They needed to know not just if a position was filled quickly, but also how well that employee was performing and how long top employees were staying with the company. The key here is to understand the interplay of these related processes and select an HCM solution that allows you to deliver a complete solution without starting a new IT project at every turn.

Plan for integration with non-HCM solutions before selecting a service provider. As you consider a cloud solution, it is important to consider any required integrations. At one organization I worked with, getting integration right meant getting the value not only from the HCM solution, but also from other solutions that the leveraged employee data and employee hierarchies. Without shared employee hierarchies and role information, manually updated tables that did not properly capture information on employees’ roles would have limited their procure-to-pay workflow approval processes. By integrating the solutions, procurement managers could ensure that the people making purchases were managers, and that they had the authority to make the types of purchases they were making. The same HCM employee data and hierarchies are also often required in core systems and customer experience systems. Considering the need for these important integrations will reduce ongoing technical costs and enable greater automated workflow from the solutions implemented.

Next Steps

Ensure that your HCM solutions can scale internationally. For global companies, scalability means going beyond hosting capabilities to include factors such as international localizations and service level agreements (SLAs) that provide for availability, redundancy, and performance at all global locations. HR executives need the ability to look at employee skills and costs globally so that they can make the right decisions about where to locate operations to maximize business results. One organization I was working with was struggling with expansion in Asia since its HCM solution lacked the required software localizations and bi-directional support for languages. This meant mangers needed to maintain separate systems and struggled to bring together key processes and data. For this reason, an HCM solution should consider not only today’s requirements, but also future international scalability.

Thought Leader

Christopher J. Sowa is vice president of Oracle Customer Strategy and Insight.

Ensure secure ownership of HCM data. Co-mingling of data in the cloud can pose a security risk and raise data ownership questions. For these reasons, it is important that the long-term control of data be maintained. Data privacy laws, which often differ by country, also need to be considered. For example, some European companies are required by law to have employee data domiciled in their home countries. Due to recent revelations about government surveillance, these types of demands are likely to increase as certain organizations and governments try to increase their control of data.

As HR executives continue to shift their focus from core HR transactions to strategic human capital management, the cloud offers them a great way to rapidly add new HCM capabilities. In choosing a solution that meets their needs, it is important that these executives look at desired HCM outcomes to understand how HCM processes are interrelated. It is also critical that HR executives partner with senior IT management to ensure that their solutions are secure and scalable.